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Where is the upright man^ with skill refin'd. 
To check their rage, and cure the pablick mind^ 
With honest zeal, to plead a People's cause. 
And guard their equal rights, by equal laws ? 




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. , X, PREFACE. 

TAE HberHe^ of a country, depend upon the Ught cmd in- 
formation postested by the people. 

Where the ettabUahedformt of worship are wrapt in mystery, 
there can be no freedom of cofMcience. Where the principles of 
^ government are dark and intricate, there eon be no eteil liberty. 
/^ When attention to buainess, fair dealing, and upright conduetg 
are not considered as the onty reputable means for acquiring es' 
totes, there can be no proper and steady incitement to industry, 
no solid happiness in the possffssiot^ qf wealth, or true enjoyment 
f^a compete7icy. 

There happens to be a rage in the present day, for acquiring 
property by accident. Some men are supposed to have made larj^ 
fortunes by speculations in the stocks and banks : And they^^o 
have not been thus fortunate, can discover no reason, why^^ieir 
Tieighbours should be thus favourably distinguished from them.-^ 
And too many are ready to lay aside their ordinary, business, to 
pursue chance as the only goddess worthy of human adoration. 

If the following inquiries can have a tendency to cure the evils 
arising from this source, the Writer will be fully compensated for 
fas trouble. 

To understand the principles of stocks and banks, it is 
necessary to understand the nature mid use of money ; I have 
therefore, selected a number of thoughts from the best writers on 
that subject. 

The history of the Bank of England, I have taken from acts 
of the British Parliament respecting it. That of Paris from 
Voltaire's works. Jlnd the hints respecting the other European 
Banks, are taken from good writers,. The whole is attempted 
tvith a plain conciseness. 

Where the measures of any government are criticized upon, 
it is done with a decent respect, but with the confidence of a free 


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Jl ossBssioNS, however extensive they may be^ are 
incapable of yielding happiness. The wants of men are, 
for the most part, factitious, and increase in proportion to 
their acquisitions of property. Nevertheless, by a desire of 
dominion over external things, and a thirst for that superi- 
ority which arises from wealth, we are urged on to exer- 
tion. Almost every one, who can achieve a fair prospect, 
will exert all his ability to gather the fruit of it. This pro- 
pensity, has a manifest tendency to the advancement of the 
public interest ; and will produce the prosperity of the com- 
munity, where itis exerted ; unless the publick mind is so 
corrupted, as to embrace wealth, in preference to virtue, 
by making property a qualification to the publick confi- 
dence, superior to those of integrity, industry, learning, 
and abiHty. 

Every member of civil society has a clear right to gain 
all the property which vigilance and industry, regulated by 
the laws of the state, can bestow upon him. Eveiy thing 
he acquires in this way, advances the interest of the pub- 
lick, and shews him tb be deserving of applause. Such 
a man is the just man spoken of in the sacred writings. 
He is not, perhaps, the good man, for whom " one would 
dare to die ;'* but he is a character which no one need to 
fear, and which must gain the approbation of his fellow cit- 
izens : But the good man, who loves his neighbour as him- 
self ; who wishes to do good unto all ; who relieves the dis- 
tresses of the poor, in proportion to his ability, and wishes 
the prosperity of all men, as he does his own, is another 
character. Such men are not .every where to be found ; 
and where they are seen, they are trusted with caution ; 
because their character is frequently counterfeited, for 
base and vile purposes. 

The divine Author of the human race, has seen fit to 
place us under various, and very dififerent situations. Some 
men appear, as if thev were formed lor successful enter- 
prise ; and others, as if disappointment was given them, as 


the fruit of every undertaking. This is> no doubt, wisely 
ordered by him, who^ plans are incomprehensible to us, 
and whose measures are all founded in the most perfect 
wisdom. But the rules and regulations adopted by civil 
society, ought always to be such, as not to afford to any in- 
dividual, or particular company of men, an accidental op- 
portunity, or a superior privilege, for the acquirement of 
property. Mankind are naturally emulous, and it is some- 
times very difficult to find the line where justifiable emula- 
don ends ; giving place to the deadly, and corrosive pass- 
ion of envy. 

Wherever the laws or the measures of state policy give 
to one man, or one order of men, an exclusive right to ac- 
quire property, or a greater and more advantageous oppor- 
tunity to improve his, or their talents, than is given to all, 
there is a just cause of complaint. 

By a measure, which is not founded in perfect equality, a 
few men may frequently derive great advantages to them- 
selves, and accumulate great wealth ; while others, vi'hoare _ 
fully as deserving as they are, remain under the ordinary " 
advantages arising from industry and frugality. This 
tends greatly to the disquiet and unhappiness of civil so- 
ciety ; because men, who, before they observed such an 
undue and unusual increase of their neighbour's property, 
were contented with their own possessions, become veiy 
uneasy. They have new and facdtious wants upon them ; 
and what they before enjoyed as a competency, they now 
esteem as only the dreadml tokens of inferiority, and the 
marks of comparative poverty. This is clearly wrong in a 
free and equal government. There are some men, who 
will live idly, and repine at that prosperity of their neigh- 
bour, which is produced by industry and attention to busi- 
ness ; these ought to be pitied : but their malady can ne- 
ver be remedied by human laws. 

Great estates are not originally acquired, unless it be by 
conquest, or by commerce. The conquest of countries, 
we hope, will no more deluge the world in blood, or be 
ever suffered to make the innocent and unoffending inha- 
bitants of newly discovered regions, the unhappy victims of 
cruel avarice. But commerce is intended to give great 
and beneficial advantages to mankind. It is the life and 
support of civilized states ; and the great medium of com- 
munication between the people of different climates. It 
gives the various nations of the terraqueous globe, a friend- 
ly intercourse with each other ; and will finally, form a 

chain of confidence and friendship thwHighout the worlds 
To hasten this important and glorious event, nothing is 
needed but a spirit of commercial enterprise, conducted 
with fairness, and unshaken integrity. 

Commerce had its origin in the superfluous produce of 
countries, aided by a prevailing taste of the inhabitants of 
e^h particular climate, for the pmluce of foreign soils. 
This important negociation, no doubt, began by exchang- 
ing one article for another : a desire of gain, promoted and 
supported by a curiosity and emulation, existing naturally in 
the bosom of the people of all nations, brought it to that 
height of perfection, where we now contemplate it. 

Agriculture, and the arts, pursued with unabating indus- 
try, must give support to commerce ; for, without this, 
there never can be a superfluous produce to export, or an 
enticing mixture of the arts, with the exported articles of 
produce, to tempt foreign nations to a consumption of them. 

Originally, there could be no settled rule for the mea- 
sure of exchanging one commodity for another, or for ap- 
preciating or settling a fixed value upon the articles offered 
in exchange. Their value was founded m the necessity of 
the receiver, and the abundance of the deliverer's stock on 
hand, with the probable prospect of plenty, or scarcity of 
the article, and the expenses of preserving it to a future pe- 
riod. The value of each article was estimated by the eyes, 
which gave the measure of quantity, upon a view of the 
bulk of the commodity under the power of the transfer. 
This may be fairly concluded from the practice of uncivi- 
lized nations more recently discovered. Recuel, in his 
history of the voyages of the Dutch East-I^dia company, 
assures us, that in the island of Formosa, when first dis- 
covered, the inhabitants had no other way of traflic ; and 
travellers, who may be relied upon, tell us, that in Ethiopia, 
the commerce of gold is carried on so at the present day. 

The extension and benefits of commerce, could nevef 
have been very great under such intolerable disadvantages^ 
and clogged with so many embarassments ; it therefore be- 
came absolutely necessary, to find out something which 
would serve as the acknowledged representative of proper- 
ty, and as the established standard of the value of the arti- 
cles passing in commerce ; for there was no way to bring the 
articles offered in exchange, to an exact, or even value 
with each other, and they were not always capable of being 
divided without being injured, or destroyed ^ , , 

A 2 


Metals offered themselves^ as the most suitable substsutice 
for this importance purpose. As they could not be well 
subjected to liquid, or Imeal measi!fre, the use of weights 
and balances, were necessarily resorted to. Shells, pieces 
of particular wood, salt, grains, fruits, and other substances, 
had been used as money, or as the agreed representative of 
the articles of commerce, and some of them are, in various 
countries, used in that way at the present time. 

These signs were very inconvenient and troublesome, 
and therefore the moment metals were discovered, it was 
easily seen that they were well suited to this use. They 
were found in all climates where civilization was introduced. 
Their hardness and solidity protect them, generally, from 
the accidents to which other kinds of money are liable. 
They may be divided, without diminishing their value. 
Their scarcity also, contributed to raise their value in thfe 
estimation of the world ; and the common consent of 
commercial people, gave them a currency as the represen- 
tative and measure of the value of things in the market. 

In some countries, their institution was very ancient. 
Abraham brought gold and silver from Egypt ; ^nd, ac- 
cording to the account given by Moses, he returned very 
rich from that country. And we find, that in those days, 
Abimelech gave Abram one thousand pieces for a trespa!!ls 
committed against him. 

When metals were first introduced into commerce as 
money, their value was determined by their weight alone. 
There was no stamp of publick authority upon them, ex- 
pressive of their relative value arising from their weight and 
fineness. Abraham gave an hundred shekels of silver for 
a sepulchre, and weighed them before all the people. In 
some countries, where gold and silver are used as money 
to this day, they are cut in pieces and passed "by weight. 
This is practised in some parts of China, in Tonquin, and 
in Abyssinia. 

The weighing metals, as money, where commerce is ex- 
tensive, must be very inconvenient ; and therefore it has 
become necessary to fix a sign, or mark, upon each piece, 
expressive of its true value, according to its weight tnd 
fineness. If this was to be done by each individual at his 
pleasure, there could be no confidence in dealing in them ; 
and therefore it has been considered as the prerogatives of 
government alone, to fix the standard of alloy, and the 
weight of all pieces of metal established as current money. 
There is no danger of fraud or deception in_thfa^ way, for 

the honor, cmd almost the existence of each nation, depends 
upon the fidelity with which this is executed. 

As antiquarians are much divided in their opinions, res- 
pecting wluch nation it was who first coined money, I shall 
not attempt to settle it in this essay. Herodotus ascribes it 
to the Lydians, and others to Ithonus the son of Ducaliver. 
Some say it was the Assyrians ; and Diodorus gives it to 
the Egyptians, because he finds that the counterfeiting of it in 
their country, was very early punished with the ampututioa 
of the hand of the offender. 

The practice of coining money, introduced what 
is called imaginary money, or money of account. — 
This mode of computation was intended *o facilitate the 
stating of accounts, and for keeping them on a regular foot- 
ing. When money becomes scarce, the articles of com- 
merce are lowered proportionably in their price, and they 
rise as money grows plenty. But still the nominal stand- 
ard used in accounts, is not altered. Sometimes when a 
nation is involved in a war, and the publick debt is too 
great for the publick resources, the imaginary, or nominal 
price or value has been raised, to the great injuiy of pub- 
lick or private characters, who are in such cases defrauded. 
Such measures are generally evidences of publick or pri- 
vate insolvency, and are seldom attempted. 

As coined metals were established in the commercial 
world, as the representative sign of the articles of com- 
merce, if each country possessed an equal proportion of 
money, according to the quantity of property offered for 
sale in it, there would exist no other difference of price in 
the same article in different countiieu, excepting what 
would arise from the transportation of it from one country 
to another, and from the demand for it in the market. 
Whereas, at present, the quantity of money existing in a 
country, has a great effect upon the price of every article. 
Money is always like water, seeking a level ; and when it 
becomes plenty in one country, or place, it is necessarily 
urged away to another. He therefore, who involves himself 
in debt, when money is plenty, is sure of being injured or 
ruined, if his debt rests upon him^ until it grows scarce. 

The burden and risque of transporting metals from one 
place to another, as a general medium of commerce, ren- 
dered it necessary, to select the most valuable of them for 
that purpose. If gold and silver were as plenty as other 
metals, it would be very difficult, if not impossible, to raise 


their value, separately, so much above that of the others, as 
it now is. There is a fineness and beauty in them, which 
originate and support a preference in their favour; but this 
would not give them the rank they now sustain, if their 
comparative scarcity did not enhance their value. 

The transporting metals, however precious they may 
be, from one count!*/ to another for the use of commerce, 
cannot be effected without nsque and expense. This dif- 
ficulty, though small in its appearance, has been sufficient 
to produce one other sign,- or evidence of wealth, which 
may be called a secondary representative of the articles in 
commerce. The ideas of a paper medium for this purpose, 
is of very ancient date. 

The origin of bills of exchange has employed curious 
inquirers much in the same way as th«y have been employ- 
ed upon other ancient matters, which had their birth from 
accident, or necessity, and v/hich were thought to be of but 
little consequence, when they were at first produced. It 
is generally agreed, that the Jews, when they were ban- 
ished from France, or the Gibelins, when they were ban- 
ished from Italy, by the faction of the Guelphs, invented 
this method of exchange to save their effects from confis- 
cation : thus, by delivering their effects and money to a 
friend, and taking his bill for a delivery of an equivalent 
from his effects or credits, in the country where they were to 
seek an asylum from persecution, they found the means of 
an invisible, easy, and sure mode of procedure, to place 
their estates beyond the reach of the extended hand of ty- 

I'he doctrine of exchange %vas encouraged by laws made 
in England, in the reign of Edward the third. When it 
was abused, by being used as an engine of oppression, it was 
prohibited ; but the facility it afforded to the then dawning 
commerce of that country again revived, and gave it a le- 

This idea of exchange, by a paper medium, introduced 
divers other species of paper, as the representatives of real 
money, which assumed a value upon the assurance they 
afforded, of the possessors having the money on demand : 
or of the certainty of his receiving it at a future day, with 
a premium for the use of it, until it should be paid. 

One species of this paper, is commonly called stocks. 
This word, generally, means a capital used in commerce, 
where a number are concerned in a common enterprize, 

and have a capital arising from their contributions in shares. 
But the appellation, \rhen applied to the funded credits of a 
government, is entirely arbitrary, and needs an explanation 
before it can be understood : for in this kind of business, 
there is no existing stock, unless the phghted public faith 
may have that appellation. 

The foundation of this kind of paper, has lately become 
very ^miliar to the people of America. The republic ha 
stood in need of aids and supplies. The individuals, who 
form the nation, have afforded these supplies upon the 
credit and faith of govemment. The republic, cannot from 
its resources, satisfy the demands with real money ; they are 
not possessed of metals in quantities sufficient for that pur- 
pose, and therefore a reasonable and equitable use ought to 
be allowed, for the delay ; and the payment of the debt as- 
sured upon a future day. The premium upon one part of 
the debt is at six per cent, per annum, another at three per 
cent, and on another there is no provision yet in actual ex^- 
ecution ; but a dependence upon the jusdce and resources 
of the nation, is such, as to give the deferred stock a value 
to the possessors, and a ready exchange in the market, for 
money, at a certain rate of discount. 

Wliile the nation of united America, shall be able to pay 
an annual interest with punctuality, upon their public debt, 
and shall convince the possessors of the public securities 
that the public resources are finally equal to the discharge 
of the principal^ these evidences of a right to receive money 
will hold a firm and permanent value ; and the possessor 
can at all times exchange them for gold and silver ; because 
there will be at all times men in the country, who will wish 
to have a part of their prcpcrty in the hands of otheis, from 
whom they may derive a use for it, and from whom they 
may be assured to receive it again at a future period. 

This project has furnished a large, an active capital, for 
commerce ui tliis country, and answers as extensive a pur- 
pose as to internal commerce, as would be answered by re^l 
money : and s;o far as foreigners are conceroed in our pub- 
lic debt, it answers the purposes of real money for foreign 
commerce. Nevertheless, it is a great grievance and bur- 
den to the people ; because, while it answers some of the 
purposes of real money in commerce, the people have to 
pay a certain rate of interest for it, by which those who are 
in posaessipn of the public securities, derive great pecunia- 
ry advantages from the toil and labours of them, who have 


none. And though the rate of interest appears stnall, yet 
it is an involuntary contribution, and deprives the people 
who pay it, of a great share of their profits in trade : I can- 
not therefore agree with those who consider a public debt, 
as a public benefit. 

Besides this, there is another consideration' which ought 
to have weight ; it is very possible that America may be 
so unfortunate as to be engaged in another war. Large 
supplies may be called for, by which the exigencies of the 
goverament may exceed its national resources, and the 
payment of principal and interest may be necessarily de- 
ferred to a future day Should this ever happen, the stocks 
will sink in the hands of the proprietors. Stockjobbers will 
be multiplied, and public securities be agahi made the en- 
gines of cruelty ^and oppression. The transactions of our 
own age exhibit a variety of examples of this kind, and our 
integrity ought to urge us to every exertion that can have 
a tendency to prevent a repetition of them. It will there- 
fore certainly be well to use every means which industry, 
economy, and frugality can point us to, for the sinking of 
our public debt. If there is any thing in the observation, 
that a public debt is a- security to a government, it can be 
only where a government founded on a revolution, is in 
danger from a counter revolution. Perhaps the idea was 
introduced into Great Britain upon the large debt contract- 
ed to support the war which expelled the house of Stuarts ; 
If there had been a counter revolution there, the men who 
had aided William v/ith money, would have lost their pro- 
perty ;. it was therefore, in that instance, their interest to 
support the government under the revolution. We are 
very apt to borrow maxims from a nation from whom we 
derive our common language, without examining their ori- 
gin, or inquiring strictly into their application to the cir- 
cumstances of our country. 

While there are stocks transferable by their constitution, 
there will be stockjobbers, or men who will buy and sell 
stocks for themselves and others. While this business is 
conducted with truth, sincerity and fairness, it may be con- 
sidered as reputable and honourable ; but when in this, or 
in any other business, chicane, cunning, deceit, and fraud, 
are adopted as the ordinary means of making a good bar- 
gain, the men, who practise in this way, renouncing the 
principles of truth, honour, and honesty, are contemjjtible 
and dangerous in society. 

In Europe there are a great numbet,cimeg.who devote 


themselves to this kind of traffic, and who avail themselves 
of every art and accident to rob the unwary and necessitous 
part of tlie community. News of victories won by armies 
which had never seen an enemy, of wars raging where 
nothing but peace prevails, and of treaties of peace between 
nations which had never considered of preliminaiy articles, 
furnish only a small par^ of the vile means used to deceive 
and defraud the less attentive and more industrious part of 
the people. 

In our own country, and at the present day, stockjobbing 
has not been carried to such a height as it has been in Eng- 
land ; but we have no reason to conclude that all who have 
concerned themselves in the business have, in every in- 
stance, taken the same care of their neighbour's interest as 
they, have done of their own. 

We have other kinds of paper which we call bank stock. 
It may be well, therefore, to say something on the. nature of 
banks in general. 

The word bank is derived from the Italian word banco, - 
or banca ; because those of that nation who used to exercise 
themselves in this kind of business in the public places of 
trading cities, seated themselves upon forms with benches 
to write their letters, count their money, or to draw their 
bills of exchange. When they failed, and became unable 
to pay their debts, their benches were broken as a mark of 
infamy : from which the word bankrupt is derived. 

A baiik now signifies a public office for keeping or circu- 
lating money, to be employed in exchanges, discounts, the 
loans of government, &c. 

Banks are kept by private men on their own account, or 
by public bodies incorporated by an act of government for 
that purpose. 

Private bankers are generally men of large property ; 
their business is lucrative according to their stocks and 
reputation. By obtaining a credit, and by creating a confi- 
dence in the public mind, they induce men who have their 
property in cash, to deposit it in their hands for security ; 
for which the banker gives a paper evidence of the proper- 
ty, assuring; the punctuality of its being redelivered on de- 
mand. This paper being, by its tenor, transferable, the 
possessor of it can immediately, if his banker is known, ex- 
change it for money or for any article in commerce, with- 
out any discount or depreciation ; and derives all the bene- 
fits from it which he could derive from real money, without 
a liability to those accidents which would attend the keeping 


«i large quantity of coin by him. But the value of this paper 
is founded altogether upon the assurance that the money is 
ready when called for. While this assurance exists, the 
bill will continue to circulate with all the credit of real 
specie $ but the moment there arises a doubt on this point, 
it fells into a useless, worthless state. . 

Two principal advantages result to the banker from such 
deposits. Having ready money by him, he can exchange 
money for private securides payable at a short but future 
day, receiving a reasonable premium for advancing the 
ready money. Thus if A, who lives in America, draws a 
bill of exchange upon B, who lives in Europe, requesting 
him to pay to C, or order, one thousand pounds at dxty 
days after the bill shall be presented to him ; C, or his 
assignee or indorser, presents the bill to B, and gives his 
acceptance of it ; but as C wants the money immediately, 
he may go to a banker, and if the drawer, acceptor, and 
indorsor, or either of them, can be relied on, the banker 
will pay the money for a reasonable discount or premium, 
for waiting the sixty days. li there is any hazard in the 
business, the premium will be increased in proportion to 
the risque attending it, and whether it exceeds the legal 
rate of interest or not, there is no law to control it : because 
the idea of a hazard upon the principal, takes off the idea 
of illegal usury. 

The plan of depositing money with a banker, necessarily 
led to that of rendering bank notes a currency in the me- 
dium of trade. From this idea the banker derives great 
advantage, because that by his business, there is a constant 
stream of cash issuing through his chest ; by means of 
which he is enabled to issue notes for a much larger sum 
than what he holds as his own private property : and thus 
by premiums on discounts he accumulates a profit propor- 
tioned to the reputation he sustains, and the opinion the 
public holds of his integrity and responsibility. But this 
opinion depends for its support altogether on the security 
he takes for the note he emits : should the securities he dis- 
counts upon, prove in frequent instances, to be bad, and re- 
main unpaid, he will be unable to redeem his note, and this 
must ultimately destroy his credit,and ruin his business. The 
idea he issues his notes upon is, that the money is at the com- 
mand of the possessor of them ; and the securities he takes 
constitute a part of the stock wherein this assurance is 
grounded ; and in proportion as they fail in their punctuality, 
the stock fails on which he issues his notes. It is very extra* 


ordinary and curious, to see how h.r the men donoemed in 
this kind of business in England, France, and Holland, s^ 
capable of deciding instantly, upon the credit of the drawer 
and acceptor of every bDl of exchange offered to them for 
a discomit : it shews also, in a very convincing manner, 
what great proficiency men can make in a business to which 
nature has fitted them, and to which alone they pay all their 

Public banks are corporations established by legislative 
authority, with an expectation in the government of deriv- 
ing certain aids and supplies from them. 

The Bank of England, from the nature of its constitution^ 
cannot be considered as a public national bank, because the 
nation owns no part of the stocks which compose it, although 
the public derive great advantages from it, by way of loans 
given upon the £scount of certain and fixed annuities. , 
Where there is a national bank the interest of every con- 
sidei*able private banker is quite incompatible with it : 
hence in England, because of the national advantages de- 
rived from the established bank, the parliament have laid 
private bankers under certain restrictions ; and, amongst 
others, that contained in a statute made in the reign of Ann^ 
which provides that there shall be no association of more 
than six persons, in their private capacity, for the business 
of banking. The number of separate private bankers in 
that country, is, however, very great ; but the sums they 
discount are not considerable enough to interfere with th% 
business of the public bank, which could not frequently at- 
tend to small discounts without great inconvenience. 

The convenience of placing specie in banks, where it is 
secured by strong bars and faithful guards from thieves, and 
by deep vaults fi^m the ravages of the flames, is found to 
be so great in commercial countries, that it is universally 
adopted. The possession of paper which bears a demand 
for an immediate exchange of gold and silver, without a 
possibility of denial, gives it all the advantages as a circu* 
lating credit which the imagination can conceive of. Such 
paper embraces all the articles of commerce ; and in coun* 
tries where public &ith and private banks are well establish- 
ed in the commercial opinion, there is but very little rea} 
money used in the measure of trade. 

In a commercial country it is of but very little conse- 
quence to have a bank in credit with the people of the 
country where it exists^ unless it possesses the &ith of 
foreigners coming there to trade. .y GooqIc 


Public banks are of two kinds ; those of the first are 
wholly instituted on the public account, and placed under 
the direction of magistrdtes, or officers of the government, 
trho are to take care of the bullion or specie deposited in 
them for the use of the proprietors, and by their order to 
be managed for profit or advantage. Such is the famous 
bank in Amsterdam, which is conducted with so much 
fidelity and exactness, that one of the magistrates was exe-^ 
cuted for appropriating a small sum, although he returned 
it in a short space of time, and before the fact was discover- 
ed. The regulation of that bank is such as gives it the 
highest public confidence, by means of which there is 
scarcely an instance of any money which has once been 
thire deposited, having been taken out. Convinced, that 
the money is always ready when demanded, the man who 
^ is to receive a payment from another, is contented to appear 
at the bank, and to be credited the sum in bargain, on the 
bank books ; and he again transfers it in the same way to 
another ; so that the same sum will be passed in a thousand 
payments without being seen, weighed or counted by any 
one, excepting him who first deposited it in the bank. 
Thus millions are negotiated in a week, without weighing 
or counting money. This easy mode of doing business is 
supported by an unshaken confidence, that the money is 
Iready at all times, when called for by the person in posses- 
sion of the paper evidential of its being deposited. Should 
#is confidence be once brought into doubt, all the authority 
of a most arbitrary government, exerted by a most vindic- 
tive and independent magistracy, would not be able to main- 
tain the character of the bank, or to give currency to its 
credits for one day. 

It is confidently asserted by writers, that the money de- 
posited in this bank amounts to three thousand tons of gold, 
or as some say twenty-eight millions sterling. Sir William 
Temple, who examined that bank with the prejudice of an 
incredulous Englishman, tells us, that " The place where 
the treasure of this celebrated bank is lodged, is a great 
vault under the town house, provided with doors, locks, and 
every other security necessary to the preservation of the 
contents. And that whoever goes there will discover a 
vast treasure in bars and itigots of silver plate, and also an 
increcBble quantity of sacks foil of metal, said to be gold 
jfikd alver ; but as there are none but th^ Burgomasters 
who have the directum of this bank, and as there are none 
rho keep an account of what is brought in, or carried out, 


it is impossible to know, or even to guess, with exactness, 
the proportion there is between the real and imae^inary 
treasure of it. It does not solely depend upon the efiective 
gold and silver actually deposited for its credit, but is sup« 
ported by the credit of the city and of the states ; of which 
the funds and revenues are as great as those of some 

By the constitution of this bank and the laws of the state> 
all the payments on bills of exchange, and for wholesale 
goods, are to be made at the bank only, unless the sum is 
not so high as three hundred guilders ; so that the debtor 
is obliged to carry his money into the bsuak, and the creditor 
is obliged to go there to receive it. 

Writers sj^y that the city of Amsterdam is supported in 
the real magnificence in which it appears, by the profits 
of this institution, while all the people are willing to 
lodge their money i;^here it will safely rest secured from 
every possible accident, and where they can use it without 
the trouble of telling or of weighing it. 

This bank makes no negotiable Ibills, but gives receipts 
for money deposited, which are good to the possessor for 
the sum mentioned, and which may be transferred by cer- 
tain established forms. 

The profits of this bank are immense, though the sources 
of them are concealed with the usual secresy and silence of 
the Dutch people. But it may be easily seen that they 
give receipts for deposits, which exist only in securities^ 
and on which they receive unlimited premiums for their 

The Bank of Paris was erected upon the scheme of Mr. 
Law, a Scotchman, in the year 1716; and in its history* 
gives a striking instance of the impracticability of support- 
ing a paper medium without an Unfailing assurance of a 
ready exchange for specie. 

This attempt was made during the regency of the Diike 
of Orleans, and has'lieen very severely treated by English 
writers ; but the account here given of it is taken from 
Voltaire's works, and may be relied on. 

There are two classes or characters of men who are 
naturally avaricious ; the one is composed of those who 
heap up wealth with an ambitious view to excel their neigh- 
bours in point of property ; the other of them, who have no 
regular bounds to their expenditures, and are therefore al- 
ways streightened in their finances, let their income be 
what it may. The regent of France was in Jhejattei* 


lilass. His demands for money in his private and in his 
public capacity, were insatiable ; a project, therefore, foF 
aifording ample supplies, was very flattering to him. 

Mr. Law projected his plan upon principles which, if 
they had been strictly pursued, would have been an im- 
provement on all the preceding plans in Europe ; but he 
wished to flatter the court. He proposed that he and his 
associates should supply the funds that should be adminis- 
tered by the authority of the government ; and that the 
bank should have the appellation of the bank royal. This 
plan wa-s approved by the council, and was finally adopted. 

The bank thus organized, effected all the purposes which 
were expected from it. The quantity of circulating medi- 
um was exceedingly increased. The peopl^ had a great 
facility in the payment of imposts. Commerce received 
new life^ and derived new vigour from the aid of the insti- 
tution. In the second year of its existence, the government 
ordained that the bank notes should be received as cash in 
<5very branch of the revenue. 

The-suceess of the bank was so astonishing, that in the 
second year the government wished to be the sole proprie- 
tor^ as well as the only director of it, and accordingly pur- 
chased all the stock. 

The power of this government being uncontrollable, the 
plan of urging into circulation a medium by the voice of 
sovereign authority, without adequate funds for the support 
.of it, was conceived. The event was such as might be ex- 
pected. The bank notes were discovered to exceed the 
real specie deposited and the funds provided as a constituent 
'for them, and they therefore depreciated with great ra]iid- 
ity. In the year 1722, they were thrown out of circulation ; 
and one writer observes that they were not finally worth the 
value of the paper on which they were printed. Commerce 
in that country received a shock fi^m which it has never 
been recovered. The finances of the nation became de- 
ranged, and the ability of the government was exceedingly 

There were men then who made great estates from the 
public calamity ; and by the splendour of their fortunes in- 
toxicated the people in England and in the Netherlands. 
Hence arose the South Sea bubble in great Britain, divers 
mad schemes in Holland, and the famous lUnd bank in 
New-England, which for several years controlled the elec- 
tions of the province,, created incurable confusiorv and finaU 
'v ruined a great number of families. 


ITie emission of paper bills of credit in the New-England 
states was first no other than the anticipation of particular 
taxes ; but as the specie could not be produced to be ex- 
changed for them at all times when demanded, they could 
not avoid a depreciation. This depreciation virtually les- 
sened tlie quantity of medium, and created a necessity for 
a further emission ; whence it has happened that there 
never has been an instance of emitting bills but where they 
have been redeemed at a depreciated value, if redeemed 
at all. 

New-Hampshire had paper money at all times before the 
year 1768. The situation and character of the people 
were changed for the better almost immediately on their 
having a regular, unfluctuating medium of commerce. 

Rhode-Island being more out of the control of the gov- 
ernment of the mother country, has always had a paper 
medium, or a bank without stock. The effects are too ea- 
sily seen to need a comment. 

The Bank of Genoa is the most ancient bank in Europe ; 
the date of its institution is not certainly known. This 
bank was first constituted from certain branches of the pub- 
lic revenue, upon which, sums were borrowed during the 
exigencies of the commonwealth, and which, for a long 
time, were not violated through any perplexities. But by 
their state being involved in the wars of the last and present 
centuries, they exhausted their treasury, went beyond their 
public resources, and for ever destroyed the credit of their 
bank. The commerce of their country died with it. The 
state lost and has never yet regained its importance. 

These are not the only instances which history affords of 
the extreme folly of attempting to support the credit of a 
paper representative of money by the mere authority of 
government, without being able to command real money> 
promptly, to support the credit of it. 

The situation of all the states severally in 1775, and of 
all conjointly represented at that time in Congress, produce 
ed instances where the most determined patnotism, strug- 
gling for what was justly considered as the foundation of sdl 
that could render life and property woithy of possessing^ 
attem{)ted in vain to support a paper credit upon the mer^ 
authority of law. Severe penalties were annexed to even* 
speaking against the value of the currency. Very singu* 
lar and terrible tribunals were instituted, with summary 
and arbitrary processes, to punish those who dared to con» 
sider the signs of money, which never existed^ as unequ^ 


to gold and silver ; but all was ineffectual, the depreciation 
became exceedingly rapid. It was with great address sug- 
gested, that the money did not fall, but that the articles of 
commerce rose in consequence of the war. And the two 
last remedies attempted, were stopping the auctions and 
and regulating prices by laws. Had the laws of nature ad- 
mitted of paper bills of credit, where there was no real 
money to exchange for them, being capable of represent- 
ing the money of the world, these efforts could not have 
&iled of success, more especially when the greatest penal- 
ty of all was the stigma of a want of patriotism, and the 
unhappy offenders being held up to the people, by com- 
mittees, as an enemy to his country's liberty. 

I do Hy no means condemn the extraordinary measures 
above mentioned ; they were indispensibly necessary to the 
salvation of the greatest cause which the world has seen ; 
but I conclude, that they are inadmissible, unless it is on 
some great and similar occasion. 

There are other public banks in Europe ; but there is 
no necessity of paying a particular attention to them in this 
essay, excepting that • which is established by authority in 
London . For by the observation s already made upon others , 
and whifch shall be made on that, the general principles, 
as well as the public utility of banks, under proper limita- 
tions, will be seen. 

In former times, the idea of improving the public credit, 
as an active efficient capital, with all the advantages of a full 
circulating medium, was never conceived. The kings of 
the nations in Europe, when pressed by the exigencies of the 
state, used to borrow money on pledging the jewels of the 
erown, or on mortgaging the lands of the royal domain, o( 
by some other pledges of valuable property. 

The Jews are remarkable for strong traits of national 
character, but for none more than their ability and adroit- 
ness in managing money. When they were banished 
France, and Italy, they resorted to Germany, and to the 
Netherlands ; where they were cordially received, and 
where their mvention for turning money to advantage, in- 
creased their own wealth, and instructed their neighbours 
to increase theirs. 

When William the third, had expelled James from th© 
throne of England, and had, by the war through which 
that revolution was effected, involved the nation in a heavy 
debt, he had recourse to the principles, and the practices of 
the children of Israel for relief. Under the exigencies q( 


his affairs, his ministers introduced plans, which other n^ 
tions, as well as America have been glad to imitate. A- 
mongst which was that of the famous hank of England. 
One Mortimer, who wrote in the year 1761, supposes that 
William had been initiated into the principles of state 
banking, at Amsterdam, by his friends of that city. 

The bank was erected in the year 1693, to commence in 
June 1694. The king and queen, by an act of parliament, 
were empowered to issue their commission, imder the 
great seal, appointing commissioners to take subscriptions 
by any persons, natives or foreigners, for raising one million 
two hundred thousand pounds : and the parliament agreed 
to raise 1,500,000 pounds upon certain annuities, and 
to pay the governor and company of the bank one hundred 
thousand pounds annually. The bank loaned the govern- 
ment one million six hundred thousand pounds. The one 
-million two hundred thousand pounds was the stock in real 
money, deposited by ^e subscribers, and the debt due from 
the government on the above loan, and for which was pledg- 
ed the faith of parliament upon the above stipulated annui- 
ties, constituted another part of the stock. The bank stock 
has been increased by new subscriptions, according to di- 
vers acts of parliament, and the charter of the bank con- 
tinued during the existence of the annuities pledged by 
government for tlie money borrowed. The last act -of par- 
liament for that purpose was made in the year 1781, in con- 
sideration of a loan of two millions to pay off a debt of the 
navy department. 

The acts regulating the bank, proude that their debts shall 
never exceed their capital stock, Sd that if they should, at 
any time, Exceed the capital, the individual members shall 
be liable, of their own private estates, for such excess. The 
money lent to the government being on the credit of the na- 
tion, that credit is considered as good stock, because certain 
duties are irrepealably pledged ; and there can be no reason 
to believe that any possible exigency would induce them to 
violate their faith in a matter upon which the credit and 
commerce of their nation so much depends. A failure in 
that bank would derange the finances of the government, de- 
stroy their commerce for a time at least, and involve the na- 
tion in a great and almost irretrievable calamity. To pre- 
vent this, the parliament guarantees the credits of the bank, 
by providing that their notes or bills, dravm to the amount 
of one hundred thousand pounds, originally payable by the 
{government annually) and the increase of that sum, by sub-* 


sequent acts on loans, shall he distingulshsd from the oth- 
ers ; and if they shall be demanded at tlie bank on days of 
discount, between the hours of nine and twelve in the fore- 
noon, and not paid, then, on affidavit being made of the 
fact, they shall be immediately paid in the exchequer, 
without any further process or delay, and without any other 
warrant. The sums so paid, are to be charged to the one 
hundred thousand pounds, and the increase of it annually 
payable by the nation to the bank. The other credits are 
wan^anted by act of parliament, providing, that when judg- 
ment shall be rendered against the governor and company 
of the bank, and the money not paid on producing the exe- 
cution, that the same shall be brought into the exchequer, 
and be there discharged by the public treasury without any 
further warrant or delay. This provision is absolutely ne- 
cessary to the credit of the company, because their private 
estates are not liable for any thing more than what their 
debts shall exceed their capital, and their corporate property 
cannot become at to be taken in execution. 

The interest originally allowed by the nation to the bank, 
was four pounds for the annual loan of one hundred pounds ; 
but it was afterwards, on other loans, altered to four and an 
half per cent, on others again to four ; and on the loan of 
1781 it was reduced to three per cent; 
Thus we see, that this mighty piece of machinery, on which 
'almost all the national movements of Great Britain depend, 
is supported by the certainty which thfe creditors realize, 
that they can receive, when they shall call for it, the real 
money for their paper, evidential of the deposit. Some of 
their writers have adva!Red principles which no sober man 
will agree in, that a n tion has a right to establish what they 
please for a medium oi commerce, and that it is quite im- 
material what that medium is composed of. If by this as- 
sertion they mean, that a people, by their unconstrained, 
common consent, have a right to receive what they please 
in exchange for articles of commerce, they are right ; and 
this medium, or niei^sure of appreciation, is money to all 
who receive and can'p<iss it. But there is no government, 
however forcible it may be in other matters, which can im- 
pose any thing besides the precious metals, on the people, 
as money, for any considerable time together. The paper 
of the bank of England is the money of that country, but it 
is not established as such, by legal authority. It was never 
attempted as a tender for debts, but has rested on the volun- 
tary consent of the commercial people, as receivable on 


the idea that it represented money which is at all times teH- 
dy to be produced. 

Some of their writers bestow the most extravagant en- 
comiums on this institution ; while others, who are appa- 
rently as patriotic, as learned, and as candid, condemn it as 
a bubble which will finally burst ; as an engine of oppres- 
sion and cruelty which tends to tyranny, and willifinally ruin 
the nation. 

The Bank of the United States of America, is on prin- 
ciples of the same class with those on which the Bank of 
England is established, but depends upon the credit of the 
government for a greater proportion of its stock. There 
is only one quarter part of that part stock in real money ; 
the other three quarters are in public securities of the 
public funded debt at six per cent, inerest, and three per 
cent, at half the nominal value The value of them depends 
upon the assurance of their final payment^ and on the punc- 
tual payment of the interest stipulated. Should there be 
an expectation of a failure in either of these, the credit of 
the bank would be prpportionably inju|:ed ; but these^ecu- 
rities are, by the economy of ttie^treasury, so blended with 
that of the bank, and that of the bank with the existence of 
the govemnient, that they must be the last pillars, which 
will be suffered to be overturned by a public calamity. 
Whether it was either fair or necessary to give in the ope- 
ration of this system, particular holders of a part of this 
kind of public securities this great advantage, is not neces- 
sary now to be decided : but die advantages resulting from 
a part of the stock, being composed of them, is so im- 
mense, that the bank cannot fail of a support, as far as the 
proprietors are able to support it. 

Seven millions and an half of dollars, three quarters of 
the stock which arises from the subscription of individuals, 
is composed of these securities 5 so that this three quartera 
of the stock, are a loan to government, upon six per cent, 
interest, and the stockholders have a right to issue bank 
notes to the full amount of their capital, at the same rate of 
interest, by means whereof the proprietors of the bank, 
have a legal right to receive twelve per cent, upon that 
part of their stock ; and this makes a use of ten and an 
half on the whole, including tlie part which consists in hard 
money. Upon this idea, the. subscribers to the bank would 
have been glad to have sunk the interest to three per cent, 
if they could not have become subscribers without. The 
advantage arising from their having a right to_extend their 


credits to the amount of all the money deposited for safe- 
keeping ; and the determination of the treasury to deposit 
all the monies arising from the revenue in their hands, is so 
exceedingly great, that this would have been a good bar- 
gain on the side of the stockholders at three per cent, for 
their securities. 

The debts due from the corporation are never to exceed 
their capital, and the money actually deposited in the bank ^ 
for safekeeping. They are not to trade, or to biiy or sell 
any thing but bills of exchange, and silver and gold ; and 
should their debts ever exceed their capital, and the specie 
in deposit for safekeeping, in such case the directors who 
issue the notes, and ail the propnetors who shall be then 
present, and shall not enter their dissent to the measure, 
shall be liable in their persons and in their private estates. 

By the above provision, the creditors of the bank are 
completely secured, provided that the directors and acting 
proprietors are either faithful, or of sufficient ability* 
Should this precaution be inadequate, there are other checks 
provided, which are able to afford the highest assurances 
that can be raised on tho primapies of banKlng upon pub- 
lic credit. 

The officer at the head of the treasury department, has 
by the act of incorporation, full authority to demand a state 
of the debts, and credits ; an account of their stock actual- 
ly existing in effective money, and of the deposits in their 
iiands : moreover, the act provides, that their notes shall be 
received in the payment of all duties and revenues, in the 
room of real money. This will give the bank a credit as 
extensive as the quantity of money in demand, for all im- 
posts, excises and duties, and fully guarantees their credit, 
unless tht y shall swell it beyond the limits of the revenue. 
Upon every view of this corporation, we must conclude, 
that while so great a part of their stock shall consist of pub- 
lic securities, and the credit of them shall be fully sup- 
ported, the advantages of the bank will be exceedingly 
great to the proprietors. The United States further gua- 
rantee the seven million and an half of dollars, by allowing 
them to be in public securities. The advantages of this 
corporation by far exceed any thing of the kind which has 
heretofore .been attempted, excepting the Parisian bank : 
that was attempted as a public, this is a private advantage. 

There can be no wonder that the opening a subscription, 
Vhich offered such immense and unprecedented profits to 
tte people who should be lucky enough to be conceniGd> 


Should raise sucli a bustle among the speculators in pa{>er 
securities, and finally afford so much chagrin at the dis- 
appointment of the unsuccessful part of the community. 
If the members of Congress had been men of like passions 
with the other citizens of America, possessing the same 
jealousy m regard to private interest which men generally 
have in private life, we might have wondered that they 
should suffer a few men to embrace such extraordinary 
privileges in exclusion of all others, and to ravish very- 
great estates from the public exigency, which others were 
as fairly entitled to as they were. Congress seemed' to 
have been aware of what was to be expected upon opening 
the subscription ; for they attempted what, perhaps, some of 
the members thought to be a sure and salutary preventative, 
by the supplementary act. By that it was provided, that no 
one person should subscribe more th tn thirty shares in 
one day ; but no provision was made against subscribing in 
false or in unauthorised names. It was clearly evident that 
the subscribers would throng on the occasion ; and yet no 
effectual measures were adopted to prevent monopoly, 
frauds, and impositions. 

These advantages were foreseen by nearly all the people ; 
but the members of congress did not discern them in their 
public capacity. The house appropriated to receive sub- 
scriptions, was, as soon as the auspicious day dawned, 
crowded by an incredible number of people : if a golden 
mountain had been kindled, emitting from its crater a lava 
of the purest gold, liquid, yet tangable, the crowd would 
not have been greater, or exhibited more intense eagerness 
to share in the plimder. 

Those who appeared on this occasion, were not all of 
them patriots, who had saved their country, or the most 
deserving part of the community of United America. The 
men who had risqued their lives in the war, or who had 
parted with their patrimonies or hard earned estates, to 
save the public liberty stood at a distance, and with aston- 
ishment beheld the singular and unexpected phenomenon. 
The securities which they received for their services and 
properties, in the place of gold or silver, and had sold at 
two shillings and sixpence in the twenty shillings, resumed 
their piistine value in the hands of their new possessors, 
and greatly enlarged their new and unexpected value by the 
machineiy of the American bank. 

As an apology for -such undue advantages to a part of 
civil society^ it is said, that it 4s of no consequence to the 


4goveitimcnt which of the citizens possesses the property. 
This is not true : a great part of our wants are ^ctitious, 
arising from what we see in the possession of others ; and 
therefore, when a few men, by an inequality of operation in | 
the laws of the ruling power, accumulate fortunes, and live 
in unequalled splendour, it corrupts the taste of the other 
part of the community, and draws their attention from their I 
ordinary means of business. It produces a spirit of envy, 
and renders those unhappy, who before had been quite con- , 
tented with their situation. There arc but a small part of 
mankind who can look with contentment, like David, on I 
the greatness of wicked men, and console themselves, that i 
they are only like a green bay tree, which flourishes for a 
little time, and then is not to be found. I 

Gold and silver is the acknowledged representative of 
property of every kind ; but paper is the representative of 
nothing but money ; and where the money is not actually 
existing, ready to be exchanged for the paper, then the pa- 
per represents^othing but public or private credit, and the 
credit may be good or bad, according to a variety of differ- 
ent circumstances, accidents, and events. 

I should not do justice to my readers if I did not trans- 
cribe a page from a pamphlet written by Dr. Price, on the 
nature of civil liberty, in the year 1776. 

" Specie represents some real value in goods or com- 
modities ; on the contrary, paper represents immediately 
nothing but specie ; it is a promise or obligation, which 
the emitter brings himself under to pay a given sum in 
coin ; and it owes its currency to the credit of the emitter, 
or to an opinion that he is able to make good his e^age- 
ment, and that the sum specified may be received upon 
being demanded. Paper, therefore, represents coin ; and 
coin represents real value, that is, tlie one is a sign of 
wealth, the other is the sign of that sign. But farther, coin 
is a universal sign of wealth, and will procure it every 
where, it will bear any alarm, and stand any shock ; on the 
contrary, paper, owing its currency to opinion, has only a 
local and imaginary value. It can stand no shock. It is 
destroyed by the approach of danger, or even of the suspi- 
cion of danger. In short, coin .is the basis of our paper 
credit, and wei*e it either destroyed, or were only the quan- 
tity of it reduced beyond a certain limit, the paper circula* 
tion of the kingdom would sink at once. 

« From this account it follows, that, as far as in any cir- 
dimstances specie is not to be procured in exchange for 

^ .,,_.y Google 


paper, it represents nothing, and is worth nothing. The 
specie of this kingdom is inconsiderable, compared witii the 
amount of the paper circulating in it. This is generally* 
believed, and therefore it is natural to inquire how its cur- 
rency is supported. The answer is easy : it is supported 
in the same manner with other bubbles. Were aU to de- 
mand specie in exchange for their notes, payment could not 
be made ; but at the same time that this is known, every 
one trusts that no alarm will happen while he holds the pa- 
per he is possessed of; and that if it should happen he will 
stand a chance to be £rst paid, and this makes him easy : 
but let any event happen that threatens danger, and every 
one will become diffident. A run will take place, and a 
bankruptcy follow. 

The account I have given of paper circulation, implies^ 
that nothing can be more deUcate or hazardous ; it is an 
immense fabric with its head in the clouds, that is continu* 
ally trembling with every adverse blast and fluctuation of 
trade ; and which, like the baseless fabric of a vision, may, 
in a moment, vanish and leave not a wreck behind. 

King William's wars drained the kingdom of specie : 
they sunk the revenue and distressed the government. In 
1694 the bank was established, and the kingdom was pro-' 
Tided with a substitute for specie ; ever since that period 
our paper and taxes have been increasing together and 
supporting one another. 

1% was expected at that time, that Doctor Price^s pam- 
phlet would have had some tendency to prevent the minis^^* 
try of Great Britalh from prosecuting the American war : 
but as we had nothing ourselves to depend* upon but bills of 
public credit, and these too without any specie or any pub- 
lic stipulated fuikls whereon to found them ; the argument 
was stronger against us, than against our enemies. We had 
however, been in some measure used to a paper medium, 
enthusiasm supplied the place of &ith, and confidence : and 
whilst the people parted with their property to defend their 
rights, they considered all as a necessary sacrifice to liberty. . 
^ Mankind have a natural disinclination to labour and exer«* \ 
tion. In a state of nature, hunger is a stimulus to the sav- I 
age, or he would contbue idle and inactive. In societyi ; 
ambition, that natural, and avarice, that artificial passion, | 
ui^emen to exertion; but nevertheless, labour is irksom^ I 
and all those who can devise some other method of gratify- ] 
ing their inclinations, and obeying the commands of their { 
passions, will most certainly do it ; hence it is^ thai W« fin^ ' 


%rery one, vho can drire a bargain to advantage, fbrsakibg 
tile plough to do it. 

MoQey is scarce or plenty in a country^ according to the 
demand for it. As it represents the articles exposed to 
eommerce, and as commerce increases in proportion to the 
quantity of money found to pursue it ^ith, there can never 
be a very long space of time together in which money can 
he plenty in compurison with the demand for it. 

The public securities of the United States of America 
Irere a dead, inactive kind of pn^rty, previous to the es- 
tablishment of the constitutions of the new government; 
tbey then became at once the object of avarice. . They be- 
fore had an existence, as tx> value, on the slender hope of 
iiaving something done for them at some distant future pe» 
liod ; and obtamed a motion only from the sagacity of a few« 
who happened to be right in their conjectures respecting 
the then future events of American financiering. Upon 
the adoption of the new system of government, they assum« 
ed all the properties of a rinng credit^ and became an im- 
mense active ca|ntal for commerce ; but not for such a com* 
jnerce as was advantageous to the people ; their activity 
eentened in themselves ; and while they swelled the medi- 
nm, they created proportionally a demand for more. The 
apparent success of some speculators, increased the number 
engaged in that kind of traffic, until the great towns and 
cities were filled with that kind of gentry. 

The plan of the bank still gave a new force to this kind 
of traffic, for it gave an opportunity to some part of the com- 
munity to turn their speculations to iiftraense and unex- 
pected advantage. While all the public securities might 
be considered as an active medium^ the constitution of the 
bank gave ^he proprietors authority to adB seven millions 
and an half of dollars to the whole ; besides this, their hav- 
ing authority to issue notes in proportion to the money ac- 
tually deposited for safekeeping, will prevent the dormancy 
in effect of any real money. 

We owe specie for all the paper which is now in circula- 
tion, and yet the specie in fact in the country, bears no pro- 
portion to it. This has been the case with us before ; for 
we have once and again crowded the specie out of the coun- 
try by floods of paper money, and have passed through two 
or three states ofnational bankruptcy with all the calnmesa 
of a company of philosophers. 

Solomon tells us that the rich have many fiiends ; but 
our Secretary of the Treasury, by making others rich, haf 

^— ^^.. 


•bttaned money ; and his reputation derives supiport) as well 
from the greatness of his character for enterprise^ as/rom 
the pecuniary interest which so many rich men have in the 
support of it. But the game he has played is very deep, 99 
well as very splendid, and £he whole &bric he has raised 
with so much eclat, may be at once overthrown by a run 
upon the bank. He will therelbre guard with the utmoal 
c^aution, the emission of bills for should it ever be induced 
by the exigencies of the public, or by any other meansy 
greatly to exceed its capital, he may have to follow Mr. Law 
to Venice, in order to find an asylum from the public re- 
sentment. When he shall be removed from office, it will 
be difficult to find a successor who shall obtain tbe confi* 
dence which he has acquired, and the day of succession willy 
no doubt, be a day of hazard, expectaticm, and anxiety. 

The Bank oi the United States must be makitaified, if it 
can be done^ b^the means of credit. But while the bank 
of England, which owes no more than sixteen millions step- 
lin^ more than its specie capital stock, has the support of a 
nation which has in circulation more than sixty mHUons ; the 
Bank of the U. States, which will owe seven, perhaps eleven 
millions of dollars more than its capital stock in specie, is 
supported by a nation in which there is not existing more 
than eight millions of dollars in specie ; its situatim must 
deserve great attention, and its economy be taken care of 
with great circumspection. 

The govei-nment of Great Britain, in order to secure 
their bank, are under a necessity of restraining and of regu- 
lating even private bankers, while all the governments in 
united America are vieing with each other in establishing 
private banks, or banks for tlie benefit of private companies. 
In fact, the idea of a paper currency is so familiar with os^ 
that we seem incapable of resistuig any one temptation that 
is offered to us for the emission of paper bills of credit. If 
this spirit continues to prevail, according to the ideas and 
on the principles at present advocated, our bank bills wiU 
very socrn be on a par with the old continental money. 

Amidst the varioub schemes which have been adopted 
for giving a currency to paper bills, that of establishing the 
corporation called the MMsachtueUB Bank^ is the one 
which deserves the most attention. When nations have 
been pressed with expensive wars, or other intolerable ca* 
lamiaes, they have had recourse to their public cre^t ; in 
the support of which, every member of the civil communi- 
ty has been in some measure interested. But the idea of 


giving a few men a corporate capacity to issue, regulate, 
and control the medium of commerce among a great trading 
people, was before unprecedented,and serves rather to evince 
the inattention than the skill qf those who established it. 

This plan was conceived in the year \7S5y in a time of 
profound peace, and withqyt any view to sink a public debt, 
«r to procure a public conveniency ; it was an indulgence 
to a few men in the state, who happened to ask the legisla- 
ture to grant it to them, without the proffer of any kind of 
reward. Bjn means of this authority, the proprietors of that 
bank have had it in their power to govern the medium of 
commerce in and about the metropolis of the state. By 
emitting large sums they have raised the price of public 
securities, and of other articles in the market ; and by re- 
fusing again to loan, have brought on an artificial scarcity 
of money, and sunkrthe^price^ijfthe same articles'; this has 
given them all the advantages wTiicli cou d be gathei*cd 
from the most enormous monopolies. Trade has been 
perplexed by a capricious and unsteady medium ; great 
quantities of property, more especially public securities, 
have been sacrificed to a punctuality, to a corporation which 
never had it in its power to be punctual itself if there had 
been a run upon it. 

The subscribers to this bank, with their associates were 
incorporated without any limitation of time or credits. 
Their stock is never to exceed five hundred thousand 
pounds ; but, upon this, they had a right to issue as much 
paper as they could obtain a market for, and were under no 
obtigation as to the quantity of capital, only that it should 
not exceed the sum abovementioned ; and let them issue 
as much as they will, the public, or the holders of their 
notes, have no remedy ag^nst their firivate estates. This 
is an agreed point, for the shares being transferable in their 
nature, it is quite imfiossible to know who the firofirietors are. 
The act of Congress for establishing the Bank of the Unit- 
ed States, has provided, that the directors and the proprie- 
tors actually present, when there shall be an agreement to 
issue more than their capital and deposits, shall be held lia- 
ble in their natural capacity. The same provision is made 
by parliament respecting the Bank of England ; from all 
which we may ccmclude, that the proprietors ai:e not liable 
by law in their natural capacities, without such provision ; 
Ibr if they were so liable for all the debts of the corporation, 
there would be no necessity for the special provision in 
the institution of a bank. 

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The notes issued by the Massachusetts Bank are not by 
£brce of any law receivable in taxes or revenues^or a tender 
in any case as money ; neither are they in any other tnan« 
ndt warranted to the possessors by the government. They 
are issued under the authority of the government} and yet 
the state is not reafiondble for their credit. 

The corporation of the Massachusetts Bank then amounts \ 
to nothing more than an authority delegated to a few men^ | 
to make as much paper money as they shall please to issue^ I 
and to draw an interest upon it from the borrower at six per I 

They have not failed to improve an authority so very sin* 
gular and advar.t geou8< for they have had nearly (me ndlHon 
qf doilara in circulation at a time, when they had no prcten» 
sions to have in their vault more than tvfo hundred thousand 
dollars. This gave them an interest of thirty fier cent, up- 
on their real money, if they had the sum abovementioned 
actually defiodted in stock, while the rest of the community 
were under heavy penalties if they should take more than 
&ix per cent, for the loan of their monies. i 

The General Court, in their session of the winter 1792, \ 
became alarmed at the operation of this bank ; but, per« 
haps, the alarm was given by the men who were interested I 
in the northern branch of the American Bank. They sent a ' 
committee who inquired, but never explicitly reported upon 
the credits and debts of that corporation. It seemed to b^ 
understood in the house of representatives that it was a mat« 
ter which ought not to be efioken tt/^on, and a bill was passed^ 
limiting the issues of their credit to double their capital. 

This measure was much more extraordinary than the 
original institution ; because th^, in 1785, the subject was 
new in the country ; but the principles of banking had been 
under a free discussion in the year 1Z91, while liie Amerip 
can bank was in consideration ; and the General Court tool^ 
up the matter of the Massachusetts Bank, expressly, to iQ*i * 
quire into and to regulate it ; and yet they aet it down again 
upon principles which which were never adopted in any 
other part of the world. 

All other bunks are confined in their credits to the stock 
actually deposited, and to the deposits of private individi:uds| 
but this bank is allowed to issue double its capital without 
any assurance or guarantee from the public, that their ere** 
dits shall be maintained. Their capital may he five hunr 
dred thousand pounds, of consequence they may have in 
circulation and draw interest upon five hundred thoosapd 


pounds in^hich does not exists upon a paper currency which 
in fiict represents nothings upon a representative which has 
no constituent. Thus they are incorporated with power to 
make thirty thousand pounds a year^ without making any 
consideration for it. The interest upon their loans they 
anticipate by taking it at the time of the loan^ and thus raise 
a compound interest, which pays all theu* charges, and 
leaves them twelve per cent, upon their capital besides. 
But if this was not the case, they are not at so much ex- 
pense in loaning, and in collecting the money they loan, as 
individuals would be at in managing the sSime quantity of 

They pretend, that there can be no want of security, be- 
cause when they issue their notes, they draw good security 
from the borrowers. Upon this idea, their notes are so far 
from being the representative of real money, that they are. 
nothing more than the representative of the credit of men, 
with whom the possessor has no acquaintance, and of whose 
circumstances he is totally ignorant. 

These men have led the government into the disreputable 
idea of giving a corporation authority to act as/ini^ar^ bank*' 
era J without Xh&iY firivate estates being liable for their debts. 
The notes of private bankers are issued upon the credit of 
their reputation sjid private estates. It is a matter between 
them and their creditors, and the public have no concern in 
the business. If they foil, the state is under no necessity, 
by equity or honour, to warrant their credits. 
, No doubt, there ai'e some gentlemen of that corporation, 
whose honour and conscience would oblige them to pay their 
^dividend, out of their private estates, if there should be a 
failure ; but they would not consider themselves as held for 
more than their own shares. And even this resource, pre- 
carious as it is, may ««oon fail ; for these men are mortal^ 
and we know not who will hold the shares a few years hence 
which they now hold. 

By this institution this company has taken six per cent, 
upon nearly ail the commerce in and about Boston, And 
what is more extraordinary, they have had it in their power 
to swell and lessen the medium of the country when they 
pleased, and consequently, to raise or fall the price of arti- 
cles in commerce as they saw fit. We have seen so much 
misery in our own age, arising from the bad economy of 
paper nioney, that we are called upon by every principle of 
honour and justice to avoid it in future. If we sin again 
we must do it against the strongest light and the clearest in^ 
formation, ^y y ^^^ 


The increase of the number of banks in other states, i% 
na.reason for their being multiphed in this. We have 
been long in the habits of a paper medium : in the yea^ 
1745 we issued a large sum, which, after a rapid fall, was 
redeemed at a great depreciation by a grant from the mo- 
ther country. We were then obliged to prohibit the paper 
money issued in the other New-England states, from be- 
ing received in this. For this purpose all persons elected 
to any kind of oflBce, and all those who wished to take an 
execution for a debt, were obliged previously, to take an 
oath that they had not taken any bills of credit of the other 
provinces within this. 

If bank notes are valuable, only as they represent specie 
ready to be exchanged for them, we ought to be very care- 
ful of our conduct respecting banks. 

There is a natural propensity in mankind to obtain pro- 
perty by art, by accident, and by any tiling besidea labour and 
industry : when peculiar advantages are proposed from a 
plan which will gratify them, however preposterous it may 
be, or however incompatible with the public interest, it can- 
not fail of obtaiuing votaries. The accumulation of wealth 
by the proprietors of the American bank, and of those who 
are proprietors of the Massachusetts Bank, have intoxicated 
a great part of the community ; and it may be well to ex- 
amine the principles wliich ought to move the legislature 
in this business. The people of Salem have petitioned for 
a bank, and have obtained the sanction of one branch of the 
legislature in favour of it. Another bill for establishing a 
tontine has been arrested in its careef| only by a majority of 
one in the senate. If the Salem people, and the tontine as- 
sociation, or either of them, should finally prevail, there are 
many other people in the state who have an equal claim 
with them, and who will openly, and with good reason, 
charge the government with granting exclusive privileges 
to one set of citizens in preference to the others, unless they 
are indulged in the same way. The great complaint is, 
that the favours of the government are partially bestowed 
and the advantages of the laws unequally (Ustributed. 
The complaint will gain strength by each act of govern- 
ment in this way, until all are benefited to their own satis- 
faction, or in a way to convince them, that the weakness of 
a goverment is the deatruction of the subjects. 

The true idea of erecting coi-porations is to enable them 
more easily and advantageously to ianprove the property 
which they have ; but tiic idea of giving fltem^cprporate 


powders to gain money by taking an interest on a capital* 
which docs not exist is creating a property for them. It- 
amounts to a gift from the state, and is quite inadmissible ; 
yet the proposed Salem bank, the tontine, and the Massa- 
chusetts Bank> are all calculated on this idea. 

The creation of banks gains exceedingly in the public 
opinion, in the same way that emissions of paper money 
have heretofore obtained in this state, obtain no>Y in some 
others, and lately in Rhode-Island. But if paper currency 
is the ' representative of specie, where (9 the sfiecie to be 
found? The specie now active in the country bears no pro- 
portion to the paper in circulation. As the paper increases 
the Bilver willgrow scarce. Our commerce is with foreign 
coui>tries, who will very soon, if our banks are multiplied, 
refuse our -paper currency, and our mighty bubbles may 
burst ufion u^J* 

It will be doing nothing more than justice to this subject 
to give the reader Dr. Price's opinion upon it in his own 
words. . 

« Public banks are, undoubtedly, attended with great con* 
veniencies ; but they also do great harm : and if their 
emissions are not restrained and conducted with great wis- 
dom, they may prove the most pernicious of all institutions, 
not only by substituting fictitious for real wealth ; by in- 
creasing luxury ; by raising the prices of provisions ; by 
concealing an unfavourable balance of trade ; and by ren- 
dering a kingdom incapable of bearing any internal tumults 
or external attacks, without the danger of a dreadful con- 
vulsion ; but particulirly by becoming instruments in the 
hands of ministers of state, to increase their influence^ to 
lessen their dependance on the people, and to keefi up a 
delusive shew of public prosperity, when peihaps, ruin is 

The plan of a public bank for private emolument is still 
more dangerous. If it is given to a few only, they will be 
able to command the markets, monopolize by themselves, 
or their confidential connexions, what articles they please, 
to fix a capricious estimate upon every thing, and unduly 
to influence all the measures of the government. If it is 
general, then we must have 9^ flood of pafier medium^ which, 
Uke our former fiafier currency ^ will sink in the hands (f the 

Since the taste of the public is raised insatiably for a 
bank, it may be necessary to have one ; but it ought to be 
upon a such a plan as will allow 9k great number of thepeO'- 


pie to participate of its advantages, and to be for the good 
and benefit of all the citizens in the state. 

There is one objection generally made to this plan, that 
a paper currency will give us an overflowing medium, and 
finally do great injustice. There is great weight in this 
objection ; but we are to take mankind as we find them. 
To contend against all the follies and weakness of the peo- 
ple would be but a poor way to govern them. If there is 
noothfer bank than the two now in Boston, the people, the 
trade, and the regulation of the medium, will be wholly 
given up to their caprice and humour. They will emit all 
the paper which they can lend upon good security, without 
any regard to the sufferings of the people, and at such times 
only as shall tend to their own emolument in another way. 
"They will act in concert, for the proprietors of each are 
generally interested iu both banks. 

I -therefore venture to propose anpfBer~bankrin^whicll 
all the people, as members of the state, shall be interested, 
and a great number more, as private proprietors. 

This plan ought to originate with the General Courts 
without any regard to private petitions, or associations ; for 
why should & number of men, merely because they asso- 
ciate and petition, have superior or exclusive privileges to 
gain advantages, alike due to all ? Upon the expectations 
of such associations, speculations have been set on foot, and 
large sums of money have been made upon a "mere sport- 
ing with the weakness and condescension of the govern- 
ment. We are all on the same grade of privileges, and 
nothing can induce our representatives to divide us from 
our equal rights of free citizgns. \ 

Should the state erect a back, that one called the Massa- 1 
chusetts Bank ought to be immediately repealed, or if the f 
state does not erect one, still that bank ought not exist ; [ 
or if that bank exists upon the restriction in the late act i 
J'especting it, all laws against excessive usury ought to be 
repealed ; for to give one part of the community a legaJ 
right to take twelve per cent.^upon the loans of their mon- 
ies, while others are severely punished for taking more 
than six for theirs, is making a cruel and an invidious dis- 
tinction between the people, and ought never to be allowed 
in a free country. 

There is no lawyer in the statCj who is disinterested, that \ 
will give it as his opinion, that the legislature has not a right j 
to repeal the act of incorporation of that society. It is by '. 
no means a charter of privilege ; if it is, the General Comt 


! had no right to grant^it, because the constitution expt^ssly 

} prondes, that no exclusix*e privilege shall be granted to 

! any man, or body of men. It is not like an incorporation 

^ to build a bridge, or to cut a canal, because, in the first case, 

the government grants a property in a river, which belongs 

to the state ; and in the last it is only a grant of power to 

use the property and soil which they have bought, or may 

buy of others. But the incorporation of this bank is an 

open, express privilege of taking more interest for their 

money than other people have a right to take. If it is not a 

grant of exclusive privilege, it is on the same footing of other 

legislative acts, such as incorporating towns and proprie- 

t tors, which laws may be repealed at pleasure. Here was 

no contract between these people and the government, nor 

did the latter receive any reward or consideration for the 


When ! SSy ftat there never was any other public bank 
established on principles similar to those of the Massachu- 
setts Bank, I do not take into consideration the several 
banks established in America by the legislatures of the sev- 
eral states. I have not attended to their several institutions, 
»nd should not hold myself obliged to regard them, if their 
principles are no^ in the theory of bffnkir^g. It is one of 
the defects of free and popular governments, that the rul- 
ing power being dependant by frequent elections, Upon the 
will of the people, and, that the people being liable to be in- 
fluenced by parly interests, many measures obtain which do 
» not tend to the public good. The several banks in this 
pountry may have been obtained by fair means, but yet may, 
in themselves, be wrong. There is, as Cicero says, no 
power on earth capable of making that right in itself which 
is naturally pernicious, or to make injuiy a lawful act. 

It is necessary to take notice of a measure adopted in 
congress in December 1781. Robert Morris, Esq. had 
proposed a plan for a bank of the United States. This 
bank was established by an ordinance, as far as congress 
had power to do it ; but not on principles so extensive as 
those contained in the plan proposed. In the plan it was pro-* 
vided thiit the bank notes should be received in payment of 
all taxes and duties in all the states : This would have given 
the proprietors of the bank full po^ver to have emitted a pa- 
per currency for the whole union, and to have drawn an in- 
terest of six per cent, upon the whole annually. Congress 
did not in their ordinance, even provide that the bank notes 
«hould be received by the federal treasury. But the Gene* 


ral Court of Massachusetts, in their act passed in March 
1782, made provision that all debts due to the confederated 
states should be receivable in the notes of this company ; 
«Dd that no other bank should be erected in the state. 

This company were, by the ordinance of congress, res- 
tricted as to the quantity of property they should hold, but 
not as to the debts tbey might owe. They therefore might 
issue notes to as large an amount as they pleased ; and 
there was no provision for making the directors or propri- 
etors liable in their natural capacities for what should 
exceed their capital. 

Some of the states did not agree to this extraordinary at- 
tempt for money making ; and it is rather difficult to find 
where It now is, or what was the final settlement of it. 

That I may be better understood in my ideas of a bank 
for the commonwealth, I take the freedom to mention the 
outlines of it, without having an idea that the piincipies of^ 
fered are perfect, but only hoping to suggest some useful 
thoughts on the subject. 

There are several reasons which plead in favour of the 

^ The commonwealth being a sovereign state, ought to 
possess resources independent of any other state or govern- 
ment. Should the state, by an insurrection, or by any acci* 
dent or adventitious distress, be under a necessity of antici- , 
pating a tax by the loan of money, a state bank would be 
very useful, and prevent the necessity of an application to : 
an office where it might be rejected. 

The establishment of a state bank will form an interest j 
strongly opposed to the incorporation of any other. It will \ 
be the best of all interests, the interest of all the people : 
and the bank can, from time to time, be extended, when it 
shall be necessary, by new subscriptions ; and a proper pro- 
portion of tlie spare specie may be improved in that way. 

This method, if there can be any trust or confidence in 
the governing power of the Commonwealth, will prevent 
the incorporation of a number of banks which otherwise will 
be applied for and obtained. It will prevent ajlood qffuifier 
money which will otherwise be issued on the credit of /in- 
vate men^ under the sanction of the government, without 
any efiede to be refireaented by it. By this, individuals will 
be prevented from raising or falling the mediuin of com- 
merce to answer particular purposes of speculation ; and 
the measure of trade will be rendered permanent, certain^ 
and steady. 

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Thefe is it complaint that money is not plenty enough t« 
.answer the purposes of trade. There never was a long 
time together when this complaint did not exist. Gold and 
silver represent all other property ; and when they abund- 
antly increase in a country, the nominal value of everything 
which is offered to sale, or compared with them as with the 
measure of ^ real value, will rise in proportion to ^eir 
abundance, and there will be still a complaint lor money, 
though silver and gold should be as plenty as atones on the 

Spain experienced a scarcity of mon«y when gold and 
silver had become as plenty there as lead or any other com- 
mon metal ; and the influx of bullion ruined the nation. 

If our commerce was an interior commerce, paper, shells, 
iron, brass, salt, or any thing else, might do as the sign of 
wealth ; but as the money which we want is to carry on our 
traffic with other nations, we must have those signs of 
wealth for a medium which the world has agpreed to receive 
as. such ; and we may issue paper as frequently as we please^ 
but if that paper cannot command the silver and gc^d when 
called for, it must defireciate. Every instance of deprecia- 
tion gives a new demand for more emissions, in the same 
manner as if a part was sunk or struck out of drculation. 

I know that the Engli&h writers pretend that there is not 
in the bank of Amsterdam, one quarter part in gold and sil- 
ver of the value of the sum represented by the paper issued 
from thence. I doubt 'the truth of the assertion : but if it is 
true, the people who receive the paper believe the real 
money to be there ; and as none but the magistrates have 
access to the books, it cannot be contradicted by evidence^ 
But we live in a country, in an age, and are a people where 
no such deception can take place. If we were ignorant 
enough to be thus practised upon, we should be incapabli& 
of possessing a free government. 


Six persons to be appointed to direct the receiving sub- 
scriptions for raising one million of dollars for a public bank 
for the Commonwealth (^ Maaaachtuetta ; one commissioner 
to be an mhahitant of the county of Suffolk, one of the 
county of Plymouth, one of the county of Essex, one of the 
county of Worcester, one of the county of Hampshire> and 
one of the county of Cumberland. 

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The bonk to ctmtain ten thousand shaTes. 

The papers for subscriptions to be lodged in the shire 
tpvm of every coun^ in the state, in the hs^ds of such per- 
scms as the commissioners shall appoint) they being first 
duly sworn to conduct the business fairly and impartially. 

No person to be allowed to subscribe, or cause to be sub- 
scribed, more than ten shares in one week. 

All persons subscribing for others to file a power under 
hand and seal, and acknowledged before a Justice of the 
Peace, expressing the number of shares to be subject for. 

Each person to have from the commissi(»ier a certificate 
«f the number of shares subscribed for by him ; but these 
certificates not to be transferable. 

If any difficulty shall arise respecting subscriptions, it 
.shall be settled by the commis^oners after the subscription 
papers are returned in. 

The act to provide the number of shares to be subscribed 
for in each county ; and no subscription to be made by a^y 
person belonging to one county in another. 

All bargains, sales, and transfers, and all agreements for 
the sale or transfer of any share, or part of a share, which 
shall be made bef(Mre the stocks are actually deposited, and 
before all the shares are paid in, to be null and void. 

The treasurer of the conmionwealth to be allowed at any 
time within three years, to subscribe such sum, not exceed- 
ing five hundred thousand dinars, as the legislature shall 

One fifth part of the mone^ subscribed by the treasurer 
to be paid down on the subscnption, and the residue be se- 
cured, to be paid on four instalments, by a direct tax on 
polls and estates, unless paid before. And the act directing 
the treasurer to subscribe to be considered as a sacred ir- 
repealable ccmtract, which shaU never, upon any exigency 
"(Whatever, be dispensed With. 

The corporation to be a body politic by the name of << TTie 
President and Director a ^fthe Bank of the Commonwealth of 
of Maaaachueetta** 

The president and directonsL to be elected by ballot, in 
which elecdon the commonwealth, by their agents, shall 
have a voice, according to the constitution of the bank, in 
proportion to their stock. 

The bank to continue fifi:y years as a corporati<»i ; to 
have a common seal ; to make by-laws, subject to the rules 
-and regi^tions of the act. 

One share to have one vote* for every ten shares two 


votes, for e^ery thirty shares three Totes, for every dxty 
shares four votes, and etery hundred shares five rotes. 
Those who have a right to vote on the higher numbers to 
have no more votes than are given in the highest Aumher 
they hold. 

Officers to be diosen anmiftfiy. 

The corporadon never to owe more tliansne inUtion'tQf 
dollars over and above the atnotmt Stth a trib ed ki iaehaif of 
the commonwealth, and the monies actually ^posited in 
the bank for safekeeping 

The directors and proprietor to be Habte tn'tiicdr natural 
capacities for any excess. 

The corporation never to crade iti any thfn^ but goM, 
silver, btilhon, or hiHs of exchange, and fmimisory notes. 

To be precluded from buying my p«U>lic stod&9>or pfil^ 
securities of any kind, under heavy penahsosL 

The corporation never to loan money to any other state 
or government but the ccHnitionwei^b^, and never to that a 
sum which shall be more than " > ■ ' * hundred thousand dol* 
lars, nor more than what shall make ' " i hundred thousand 
dollars, including what shall be due or the sobscripdan of 
the treasurer. 

All notes and bills issued by the Isandk to be eeoeivt^le 
in the treasury of the stirte, and by collectors of all (UXes, 
imposts, and excises. 

The state to guarantee the creiitsof tiie bank r afid>the 
supreme executive to inquire once in three months itilo 
&K state of the bank, and to comioumflate the wuation 
thereof to the General Court, when the-gofornor, with ad- 
vice of council, shall thirik it necessaiy. No ofiieer <rf the 
bank to be of the supreme executive. 

The corporation never to receive « greater jM^mium 
than six per cent, for dkcounts upon notes, or btUsof 

No other bank or corporation for bttiking to be alfowed. 

No number of persons to be allowed to aasociaite for the 
purpose of banking. 

Some men imagine that hssiks will always oweiiMre 
money than their capital stock and the iBonies depeaked 
for safekeeping ; that is, that they wilU by coAmvance of 
the directors, issue notes far beyond their property. B«it 
this is a kind of cunning and chicane Which nei«r ought to 
be aliowed. If the bank estabUshed in a xamtfff canr 

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without injuring the public^ loan more money than they 
have a right to loan, their capital stock ought to be increas- 
ed by a sew subscription) otherwise they will draw an in- 
terest on a capital which does not exist. 

This will never be the case, unless there is a greater dc- 
jbaad lor mcmey in trade than there is in agriculture ; for 
banks can never supply the &rmers with loans ; and if all 
the spare money is vested in bank stocks, there never can 
be a sufficient quantity in the hands of private persons to 
supply those who wish to take on land security. 

With many prudent and wise men, it i^ a question feir 
firom being settled, whether an easy acquirement of mcHiey 
on loan, is for the advantage of the &rmers. Where new 
lands are purchased at a low price, the increase of their 
value from thtir own improvement, and the improvement 
and settlement of the lands round them, may render them 
skble to pay an interest of six per centum per annum on their 
purchase money. But it is very evident, from every cal- 
culation, that an old farm will never afford such an interest 
on the purchase money given for it. 

Besides this, where money is offered on loan for security 
by mortgi^es, there will be frequently moments when 
farmers, from a variety of inducements, will imnecessariiy 
run in debt and lay the foundation of their own ruin. A son 
wants a settlement, or a daughter her portion on marritige ; 
the pride of the family predominates over prudence, the 
mother i^rges to ,a gratification of the children, and the &- 
ther, upon the same motive, or from a wish of ease and 
quiet, complies. The whole are made happy for one year, 
and then all involved in ruin and distress. 

Banks are not intended for loaning on land securities ; 
and if all the superfluous money is used in banks, the farm- 
ers will not obtain any. It will all be used in that way if 
such en€H*mous and ui^^recedented advantag:es are ofiere4 
as we have seen in the national and Massachusetts Banks. 
The only method, therefore, is o Uave only one bank be-"] 
sides the branch of the United States Bank : to give the 
government an interest in thatf by which we shall all be 
benefit^ and to let the advantages be so moderate that 
there will not be a crowd pressing to be admitted. By this 
method, there will be '4 proper proportion of money im- 
proved in banks to facilitate trade, and a proper proportion / 
remaining to be loaned to farmers by individuals. ^ 

The destiny of man, is to acquire his bread by toil and 
labour. But there is almost a universal reluctance to a 


compliance with this decree of our Maker. * The wishes 
of men are boundless as the wide extension of etetiuty : 
and no place, no .possessions, and no acquisitions are com-" 
petent to the factitious wants of the human race. The law 
which annexes want, sufferings, and disgrace, to idleness, 
is not more opposed to the inclinations of men, than some 
others are. There is no time, season, climate, or weather, 
which gives satisfaction to all the subjects of it ; in short, 
man is at war with his own nature, and with his natural 

There is something very instructive in the feblc of Midas, 
whose avarice urged him to petition, that whatever he 
touched might be changed into gold. His wishes being 
complied with, he had notliing to eat, drink, or wear, but 
what wafi disqualified for those uses. People are generally 
wishing to turn almost every substance into money, without 
considering) that this would render gold and silver of as little 
consequence to the world, as the stones in the street. Ip 
&ct, it would bring them to distress and destruction, like 
the man in the fable, if they could obtcdn the grant of what 
they wish. 

Dr. Robinson gives^the world a very striking account 
of the misfortunes which Spain derived from the ex- 
cess of gold and silver procured from South America. He 
represents that kingdom as the most commercial in Europe, 
when their fleet first entered the river de la Plata. But 
when they had acquired an abundance of the precious met- 
als, they lost their consequence and prosperity. '< Under 
the reigns of Ferdinand and Isabella, and Charles the Fifth, 
Spain was one of the most industrious countries, in Europe. 
Her manufactures in wool, and flax, and silk, were so ex- 
tensive, as not only to furnish what was suflicient for her 
own consumption, but to support a surplus for exportation. 
In the beginning of the sixteenth century, Spain is said to 
have possessed above a thousand merchant ships ; a number 
probably far superior to that of any nation in Europe." 

Then, after describing her mode of trade, he goes on to 
observe, that « wealth which flows in with moderate in- 
crease> feeds and nourishes that activity which is necessary 
to commerce, and calls it forth into vigorous, and well con- 
ducted exertions ; but when opulence pours in suddenly, 
and with too full a stream, it overturns all sober plans of in- 
dustry, and brings along with it a taste for what is vdld and 
extravagant^ or daring in busineaa or action. Such was the 
ireat and sudden augmentation of power and revenue} that 



the poss^^ion of ^^in^^^c^ brought to Spim, and some 
djl^mptoma of its pernicious infiuence upon the political 
operations of that monarchy soon begun to appear. Her 
flourishing manufactures, early in the seventeenth century, 
were fallen into decay. Her fleets, which had been tlie 
terror of all Europe, were ruined. Her extensive foreign 
commerce was lost. The trade between different parts of 
^er own dominions was interrupted, and the ships which 
attempted to carry it on were taken and plundeyed by ene- 
mies whom she once despised. Even agriculture, the pri- 
mary o(?ject of inidustry in every prosperous state, was ne- 
glected, and one of the most fertile countries in Europe 
haidjy raised what was sufiicient for the support of her 
own inhabitants." 

This is a most solemn lesson to nations, and if attended 
to, will strongly urge them not to wish an overgmwn me- 
dium of commerce, even though it should be composed of 
gold and silver. But when we see the people of a country 
zealously engaged in pursuit of an overflowing medium 
which has no credit beyond certain limits, and there, only 
from positive laws, which has no value in its owji composi- 
tion, or in the estimation of the world ; and which is affer- 
ed only as the representative of specie which does not actu-- 
ally exist, we may, without breach of candor, conclude, that 
the calamity of such a people, and their final catastrophe, 
as to public prosperity, is founded in, and much accelerated 
by their own folly and madness. 

There is a wide difference between the piinciples of issu- 
ing a paper medium on a bank stock, and issuing one on 
tlie coii(imon ideas and pnnciples heretofore practised upon 
this country. The one is the representative of money ac- 
tually deposited, and ready to be p4d when called for, and 
the other is only the representative of an intention to pay 
by a future tax, when the people are willing to bear one. 
The former will always be equal to real money ; the latt^ 
must, as it always has done, undergo a raf^d depreciation. 

Should the government of the commonwealth erect a 
bank, they will never do it on the idea of issuing sums 
larger than their capital stock, and the sums deposited for 
safekeeping ; because, so far as they dispense with this 
principle, so far they will in effect make a paper currency 
upon the principles of public credit alone. While this Is 
concealed, if a depreciation shall happen, it wiH not be con- 
fessed, but pretended that demands for specie raise the 
price of gold and silver^ and the articles of commerce may 



rise in their nomimJ valae, but tKid H«e will be {Lscribed Jc> 
a thousand causes before It is charged upon the tnie oneJ^ 

But it will be asked, vhat benefit will result from bank- 
ing, if there can be no mere money issued in bills thiffi 
there is actually deposited in stock ? The answer I ms^ 
has been before repeated. The gOTemment cannot iticofi- 
porate a set, or number of men, with a giift of property, but 
may give them corporate powers to Improve the property 
which they have in possession, or which they may acquire. 
By an act of incorporation they can lo&n their money with 
more ease, at less expense, find with greater security, than 
they could do it in their private, natural capacities ; and 
the advantages arising from deposits for safekeeping, will 
be what would very lately have been called great enough to 
induce the undertaking. 

The government, by such an incorporation, can, frmn 
time to time, on all cases of sudden emergency, have aids 
of money without applying to any other govemmcnt, and by 
having one bank in which all the people have an interest, 
they will prevent the operation of applications which will 
otherwise establish a great variety of banks under diflTerent 
deaemhiations ; for if one association is indulged with cor- 
porate powers, why should not another ? And if the Massa- 
chusetts Bank has a legal right to issue one million of pounds 
lawful money in notes, and to draw six per centum per an- 
num on that sum, when they may not have more than one 
half of it in their vault, why should not the associations for 
the tontine, and for the Salem Bank, and all others who will 
associate for establishing other funds in money, have the 
same privilege ? And if the Massachusetts Bank has this 
enormous benefit, why should the Salem Bank be incorpo- 
rated under privileges %iferior to theire ? What have the 
proprietors of that bank done for the public to purchase so 
much preeminence and those exclusive privileges ? Why 
should the rest of the citizens be under pains and penalties 
for taking more than six pounds for the loan of one hundred 
pounds for one year, and these men hare a legal right to 
take twelve for theirs ? 

These are very serious questions ; the public mind la- 
bours with them ; and if even the men interested in this 
extraordinary scheme, can answer them, it is high time ii 
was done. The public expect a discussion of them, and 
«re anxiously waiting the event* , . 

If the abundance of the precious metals will forfeit their 
comparative value in the opmion of the worid, how much 


mofe will a paper eurrencf » represei^g nothing but a 
credk, or a promise of money to be paid at some future day, 
lose its estimated value, wbeo it shall be abundantly in- 
cr^Lsed ? The gold and silver toni from the bowels of the 
ear^sby are of no more consequence to the first possessor 
than the com or wheat produced by labour to the husband- 
man* The labour attending the taking the metals from the 
mines, and refining them, is liardly paid by the produce, 
unless the OMmer employs slaves in the service ; and these 
might be as profitably employed in agriculture. 

The idea of the people who want banks, is to spring a 
mine of wealth without labour. They wish to draw double 
the income fit>m their property by creating a bank, than 
could be obtained in any oth^r way of improvement. 'But 
the constitution of our commonwealth, as well as that of 
the United States, conttdns a solemn compact, that no man, 
or company of men, shall have any legal exclusive 
right or privilege ; and therefore, if a hsixik for the com- . 
moBwealth is erected, the private subscribers can have no 
privilege but what slmll arise from the stock actually depo- 
sited, and from the money deposited for security and safe- 
keeping. The bank) theKefore, will be composed by pro- 
prietors who have specie which they wish to employ in that 
way, and not by men who wish to accumulate wealth by pe- 
culiar and exclusive advantages. 

The idea of a loan of money by banks to farmers upon 
mortgages of real estates, is inadmissible. It was never at^ 
tempted in any country, eiBcepting in one instance ; I mean 
tlie land bank in Massachusetts* That bubble was produc- 
ed by the circulation of iiaw's scheme in Paris. The in- 
toxication occasioned by the method in which that plan was 
managed, mad< its way into Holland and England, and final- 
ly operated in the province of Massachusetts Bay. About 
the year thirty, a company was incorporated for the pur- 
pose, as was ostensibly held out, to encourage agriculture 
and m^anufactures. home of the greatest men in the gov- 
eilimentwere of the xoi*poration, and the influence of it 
pervaded every thing* Elections* were govenied by it. 
The legislature was under its control, and its power was 
exceeded by ooching but the misfortunes and calamities 
which were- introduced by it. The notes issued by thd 
company . could not be paid, because the company had no 
funds for that purpose. There were monies due to them 
on mortgages, but that money could not be collected, and 
therefore £e securities were>old at a discount, and a rapid 


depreciatu^i took phm* A ^9^t variety pf acts, ^d laws 
»rere made in order to bting tl?is business. to a close. -The 
general import of th^m all was, to levy money from the pri- 
vate estates of the proprietors, to pay the debts due from 
the coi'poration ; the last of these £^ct^ was. made in 1759. 

After this, Apthorp said Wheelwright were engaged in 
a contract with, or under others, to supply the British ^rmy 
in America, and issued notes on theii- own credit, arising 
from their connes^ion with the British treasury. But these 
very soon began to go under par, ati4 had but a very short 
?un in commerce ; the reason was very plain : if the mo- 
ney was ready, there was no need of notes ; if the money 
was not ready, then the notes represei^ted credit o(iIy, ^nd 
not tooney. 

There was something plausible in the pix)position of the 
tontine association for loaning money to farmers on mort- 
gages. They were either not sincere, or they were igno- 
rant of the principles of banking. If a bank was to issue 
BO more notes than what would represent the specie on 
hand, it could npt be done on mortgages ; because, on bank- 
ing principles, the gold sffid silver is dways supposed to be 
ready when called for ; but when notes are made repre- 
senting specie, and yet depending upon monies arising from 
mortgages for payment, and delays are great, and an equity 
of redemption of the lands mortgaged extended to tho 
space of three years, it will be impossible to support the 
credit of the bank. 

The tontine association were quite right, however, in 
making an application ; they petitioned for, no greater pri- 
vileges than had been granted to their fellow citizens by 
this and the general government ; and they are unable Dow 
to discover the reason why one part of the people are thus 
distinguished from the other. 

' If there are evils resulting from the multiplication of 
banks, and from speculations in: public securities, those 
evils ought to be avoided. But we are frequently told^ 
that they will cure themselvee ; the same may be said ol 
all other natural, moral, and political fevils \ and if the ar- 
gument proves any thing, it will prove that there is no need 
of providing any checks against wrong doers* Fevers gen- 
erally cure themselves by their own rage, if :hey do not 
destroy the subject oi them : but we do not conclude from 
thence, that there is no injury in a fever. Conflagrations 
cease when a city is consumed, but the distress of their op- 
perations remains in a lastuig calamity. Moral evils cure 


themselves frequently by bringing offenders to tbe haltei* ; 
they are nevertheless mtolerable, because they injure and 
distress the members of the community where they are 
perpetrated. The observation, that evils cure themselves, 
is mgh akin to tliat of the stoics, that there is no evil at all : 
and not very distant in reladon from the doctrine of univer- 
sal indiscriminate happiness, as well to the wicked as to 
the righteous, in another state of existence. Political 
evils cure themselves ; but they very frequently deluge a 
country in blood in their progress, and frequently leave a 
nation overborne with a heavy debt, If t^e liberties of the 
people are preserved ; and the widows and orphans of de- 
ceased patriots and warrioi*s, are for a long time the numer- 
ous witnesses of the preceding calamity. 

Our old paper money schemes and public debt were evils, 
and they have cured themselves ; but not until they had 
placed it in the power of one part of the community to 
make vast estates upon the distresses and misfortunes of 
the other. 

The assurance that good may come out of evil, is no ex- i 
cuse fordoing wrong. Government ought to move uni- 
formly, on fixed, rational, honest, and regular principles. 
It is intended to preserve the equal ri^ts of all the citi- 
zens, and to protect the weak ag^nst the powerful, and 
the poor against the rich. But these important ends can 
never be accomplished where the measure of wealth, and 
medium of trade, is unsteady and capricious, or where the 
powers of government, by an undue influence, are made 
subservient to the gratification or emolument of particular 
associations, or of individuals in the civil community. j 

Whatever apologies may be formed by men in power, 
sadsfactory to their own consciences, from local situadons, 
from examples in the same, or in any other govemmenti 
or from the pressure of men pursuing their own interest ^ 
yet there will be an hour when these can £brm no plea ; a 
diy, when what has been right, and what has been wrong, 
in morals and polidcs, will appear with an in^sputable cer*^ 
tei43ty. . ' 

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